Sarvajanik College of Engineering & Technology

Kshitij 2k14-Abhivyakti

Technology Upgradation Fund Scheme(TUFS)

Presented By:-Patil Mayur (TT,120420129016)Joshi Karan (TT,110420129008)

21st march,2014

Technology Upgradation Fund Scheme Definition of Technology Upgradation

Technology upgradation would ordinarily mean induction of state-of-the-art or near-state-of-the-art technology. But in the widely varying mosaic of technology in the Indian textile industry, even a significant step up from the present technology level to a substantially higher one for such trailing segments would be essential. Accordingly, technology levels are benchmarked in terms of specified machinery for each sector of the textile industry. Machinery with technology levels lower than that specified will not be permitted for funding under the TUF Scheme.

Is there any scheme for modernization and technology upgradation in the textile sector?

a) The Indian textiles industry does not have the same technological edge as the textile industry in developed countries. This is mainly in the weaving and processing segments. b) The Technology Upgradation Fund Scheme (TUFS), which is the “flagship” Scheme of the Ministry of Textiles, is the scheme for modernisation and technology upgradation in the textile sector. c) This Scheme aims at making available funds to the domestic textile industry for technology upgradation of existing units as well as to set up new units with state-of-the-art technology so that its viability and competitiveness in the domestic as well as international markets may enhance.

Why is the need of modernization of the India Textile Industry?

Multi Fiber Agreement (MFA) has been integrated into WTO package. As per Agreement on Textile and Clothing (ATC), from 1st January, 2005 the quota has been removed in respect of exports from India to any where in the world. Such change will increase competition not only in the international market, but also in the domestic market. To meet the challenges the industry is required to become competitive, cost effective and quality oriented. Though industry is gearing itself for this challenge, but simultaneous help and assistance is required from Government of India particularly for modernization of industry.

salient features of the Technology Upgradation Fund Scheme (TUFS)? a) It is a Plan Scheme. b) It aims at providing capital for modernization of Indian textile industry at international interest rate. c) Technology levels are benchmarked in terms of specified machinery. d) Segments such as spinning, cotton ginning & pressing, silk reeling & twisting wool scouring, combing and carpet industry, synthetic filament yarn texturising, crimping and twisting, Viscose Filament Yarn (VFY) / Viscose Staple Fibre (VSF), weaving/knitting, fabric embroidery and technical textiles including non-wovens, garment, design studio, made-up manufacturing, processing of fibres, yarns, fabrics, garments and made-ups and the jute industry are eligible to avail subsidy under this Scheme for their technology upgradation requirements. e) Investments in common infrastructure or facilities by an industry association, trust or co-operative society and other investments specified are also eligible for funding under the scheme.

f) Voluntary Retirement Scheme (VRS) for restructuring of man power of an existing unit as a part of the technology upgradation project will be eligible for funding as a part of the project. However, interest reimbursement will not be admissible on that part of the investment. g) Improved metal frame hand looms used by the handloom weavers have also been covered under the scheme. h) With effect from 28.4.2011, Restructured TUFS has been approved with the enhanced 11th Plan allocation under TUFS from Rs. 8000 crore to Rs. 15404 crore. The Restructured TUFS ensure focus of interventions on hitherto slow growing sectors like weaving, encouragement to forward integration and tighter administrative controls and monitoring of the scheme. This subsidy is expected to leverage sectoral investment shares of 26% for spinning, 13% for weaving, 21% for processing, 8% for garmenting and 32% for others (including composite projects, technical textiles, silk, jute etc). TheRestructured TUFS is expected to trigger additional investments of over Rs. 46,900 crore during the balance period of the 11th Five Year Plan.

i) Repayment period has been modified to 7 years including 2 years of moratorium/ implementation

What type of textile machinery is eligible under the Scheme?

a) Only new machinery, which has been listed under the Scheme, is eligible. However, imported second hand shuttleless powerlooms with a minimum residual life of 10 years by the eligible applicant unit subject to maximum expired life (vintage) of 10 years as reckoned from the year of manufacture and with the value cap of Rs. 8.00 lakh per machine are permitted. b) Balancing equipment or equipment required for de-bottlenecking the production process will also be eligible for funding c) Waste reduction equipment or devices will be eligible for funding d) Eligibility of any other textile machinery equal to or higher than the benchmarked technology not listed under the scheme or developed in the course of the operation of TUFS will be, suo motto, or, on reference, specifically determined by the Government

e) The size of technologically upgraded facilities of an existing unit or size of the new unit must be of a Minimum Economic Size (MES). MES for eligible segments of the industry should be any unit which is financially viable as per viability analysis of the financial institutions or banks. The MES for the cotton ring spinning will be decided by the IMSC.

f) Machinery eligible for one segment is eligible for other segments/activity also unless its eligibility is specifically restricted for a particular segment. g) Investments such as energy saving devices, effluent treatment plant, in-house R&D, IT including ERP, TQM including adoption of ISO/BIS standards, CPP etc are eligible for benefits of the Scheme only upto 25% of the cost of machinery. h) Investments like land, factory building, pre-operative expenses and margin money for working capital are eligible for benefits of the scheme for apparel and handloom sectors only upto the 50% of the cost of machinery and equipment.

Scope of the scheme? a) Cotton ginning and pressing b) Textile industry covering:- Silk reeling and twisting Wool scouring and combing and carpet industry Synthetic filament yarn texturising, crimping and twisting Spinning Viscose Staple Fibre (VSF) and Viscose Filament Yarn (VFY) Weaving, knitting and fabric embroidery Technical textiles including non-wovens, Garment/design studio/made-up manufacturing Processing of fibres, yarns, fabrics, garments and made-ups

c)Jute industry

Nodal Agencies and Nodal Banks under the Scheme?

(i) Industrial Development Bank of India Limited (IDBI) – Textile Industry (excluding SSI Sector) (ii) Small Industries Development Bank of India (SIDBI) – SSI Textile Sectors (iii) Industrial Finance Corporation of India (IFCI) – Jute Industry And many more….

nodal agencies under the scheme for different segments are as follows:-

Which are Co-opted Agencies under the Scheme? In order to provide a network of financial organisations for sanction and disbursement of loan so as to have a wider reach to the industry in the country, the nodal agencies(IDBI, SIDBI and IFCI) have co-opted various institutions such as All India Financial Institutions, Scheduled Commercial Banks, Co-operative banks, State Finance Corporations, State Industrial Development Corporations, National Cooperative Development Corporations etc.

How are loans under the Scheme sanctioned?

Loans under the scheme are extended by the nodal agencies/co-opted institutions to the identified segments of the industry for the projects in conformity with the scheme and financial norms of the Financial Institutions concerned. The Government funding is limited to interest reimbursement or capital/margin money subsidy on a project of technology upgradation in conformity with the scheme.

What are the incentives available under the Scheme?

(i) The Scheme mainly provides for reimbursement of 5% (4% in respect new standalone/replacement/modernization of spinning machinery) interest charged by the financial institutions/banks for technology upgradation projects. (ii) In addition, the Scheme provides coverage of exchange rate fluctuation not exceeding 5% (4% in respect of spinning machinery) points per annum in respect of foreign currency loans instead of 5% interest support (iii) The Scheme provides an additional option to the powerlooms units to avail of 20% Margin Money subsidy in lieu of 5% interest reimbursement on investment in TUF compatible specified machinery subject to a capital ceiling of Rs. 500 lakh and ceiling on subsidy Rs.60 lakh. (iv) The Scheme provides 15% Margin Money subsidy for SSI textile and jute sector in lieu of 5% interest reimbursement on investment in TUF compatible specified machinery subject to a capital ceiling of Rs. 500 lakh and ceiling on subsidy Rs.45 lakh.

(v) The Scheme provides 5% interest reimbursement plus 10% capital subsidy for specified processing machinery excluding CETP, garmenting machinery and machinery required in manufacture of technical textiles. (vi) The Scheme provides 25% capital subsidy on purchase of the new machinery and equipments for the pre-loom & post-loom operations, handlooms/up-gradation of handlooms and testing & Quality Control equipments, for handloom production units. (vii) The Scheme provides Interest subsidy/capital subsidy/Margin Money subsidy only on the basic value of the machineries. (viii) The Scheme provides 5% Interest subsidy or 25% capital subsidy on benchmarked machinery at par with handloom sector.

What is the Monitoring Mechanism for TUFS? Stage I of Monitoring Process: (a) An online registration system for each eligible application has been introduced by the Textiles Commissioner, Mumbai. Applications has been processed on a first come first served basis subject to eligibility; (b) Nodal agencies/ nodal banks/ co-opted PLIs have been required to submit information online. On receipt of the loan application, the Textiles Commissioner Mumbai pre-authorize the loan application for further consideration by the Bank and issue a unique ID number; (c) Any application sanctioned by the Bank without the pre authorization ID number by the Textiles Commissioner, Mumbai has not been eligible for release of subsidies from the TUFS scheme. (d) The Textiles Commissioner will stop pre authorization as soon as the available subsidy cap is reached.

Stage II of the Monitoring Process:

The Inter Ministerial Steering Committee chaired by Secretary Textiles intensively reviews the scheme and ensure compliance of the overall subsidy cap.

year wise progress of the TUFS?

Which are the thrust segments under TUFS?

Segment

Sanctioned No Of Amount

Disbursed

No Of Amount

applications (in crores) applications (in crores) Spinning 3320 28360 3309 25519 Processing 2236 8177 2222 6839 Garmenting 1982 4205 1950 3755 Weaving 3959 6773 3944 5697 All Segments 28302 85091 28180 74627

Which are major beneficiary states under the TUFS? Gujarat, Tamilnadu, Punjab, Maharashtra and Rajasthan are the major states having availed of assistance under TUFS in terms of amount sanctioned and disbursed. The details from 01.4.1999 to 28.6.2010 are as under:

State Sanctioned Disbursed No. of applications

Amount No. of applications

Amount

Maharashtra

Tamilnadu

Punjab

Rajasthan

Gujarat

Others

Total

2070

6089

2934

1109

13155

2945

28302

18974.96

22666.22

15507.65

5808.75

8314.40 13818.87

85091

2059

6083

2926

1109

13152

2851

28180

16770.72

20448.68

11321.01

5306.48

6902.46

13877.22

74627

What is the Budget Allocation and year wise release of funds towards reimbursement of interest/ capital subsidy?

Conclusion:-Here we conclude that this type of schemes must be encouraged and utilise as much as possible for the development and progress of the textile industry throughout the world...